The Western world's first gene therapy drug is set to go on sale in Germany with a 1.1 million euro ($1.4 million) price tag, a new record for a medicine to treat a rare disease.

The sky-high cost of Glybera, from Dutch biotech firm UniQure and its unlisted Italian marketing partner Chiesi, shows how single curative therapies to fix faulty genes may upend the conventional pharmaceutical business model.

After a quarter century of experiments and several setbacks, gene therapy is finally throwing a life-line to patients by inserting corrective genes into malfunctioning cells - but paying for it poses a challenge.

The new drug fights an ultra-rare genetic disease called lipoprotein lipase deficiency (LPLD) that clogs the blood with fat. The medicine was approved in Europe two years ago but its launch was delayed to allow for the collection of six-year follow-up data on its benefits.

Now Chiesi has filed a pricing dossier with Germany's Federal Joint Committee, or G-BA, which will issue an assessment of the drug's benefits by the end of April 2015. The company is seeking a retail price of 53,000 euros ($66,150) per vial, or 43,870 euros ($54,750) ex-factory.

That equates to 1.11 million euros for an typical LPLD patient, averaging 62.5 kg in clinical trials, who will need 42 injections from 21 vials. This price will be subject to a standard 7 per cent discount under Germany's drug pricing system.

Under German rules, the launch price for a new drug is valid for the first 12 months.

A Chiesi spokeswoman confirmed the launch price, in response to inquiries from Reuters, prompted by information from health insurance sources. She added that a final figure would be set after the G-BA gives its verdict and negotiations are held with statutory health insurance funds.

"First commercial treatments are expected in the first half 2015," she said.

UniQure, which will get a net royalty of between 23 and 30 per cent on sales, said EU pricing was a matter for its Italian partner, although the Dutch firm does plan to discuss Glybera pricing during an investor meeting in New York on Dec. 1.

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With only 150 to 200 patients likely to be eligible for Glybera across Europe, the impact on healthcare budgets will be small, even at a very high price - but this case will be watched closely as a benchmark for future gene therapies.

UniQure also has plans to seek approval for Glybera in the United States, which it hopes to get in 2018.

Although there is already a gene therapy for cancer on the market in China that drug has not been rolled out to other countries, making Glybera a first for the Western world.

Proponents of the gene-fixing technology insist it stacks up as a cost-effective treatment, despite the high cost, since it could permanently cure many patients.

In the case of Glybera, Chiesi said the annualised cost was no more than that charged for some expensive enzyme replacement therapies used in other rare diseases, taking into account the drug's proven benefits of at least six years.

The drug consists of a harmless modified virus that carries a corrective gene into the body's cells.

UniQure is also working on gene treatments for haemophilia and has an early-stage project in heart failure, which would take gene therapy beyond the rare disease space.

Assuming trials are successful, analysts expect gene medicines treating more common conditions to cost less, since manufacturers should be able to recoup their research and development investment from a larger patient group.

Rivals in the gene therapy market include privately owned Spark Therapeutics, which has an eye drug in late-stage clinical tests, and Bluebird Bio, which is working on drugs for neurological and blood disorders.

Bluebird Bio and UniQure both staged successful floats on the Nasdaq market in the past 18 months, reflecting growing investor interest in the field.

Among major pharmaceutical companies, Bayer struck a gene therapy deal with Dimension Therapeutics in June, while Novartis recently established a new cell and gene therapies unit, and Sanofi has a long-standing tie-up with Oxford BioMedica. – Reuters